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Why is international asset tracing so complex?
 Marlon Pinto

Marlon Pinto

Why is international asset tracing so complex?

Asset tracing is the process investigators use to track down stolen or misappropriated assets – usually to support litigation proceedings. The goal being to freeze and reclaim as much of the original value of the assets as possible.

Victims may be private individuals or corporate entities. While the assets themselves typically fall into one of two categories: personal or business. The former includes physical property, such as vehicles and houses, or luxury items such as cars, yachts, and watches. Whereas the latter is almost always liquid capital.

The problem is that stolen assets can be transferred offshore within seconds of coming under the fraudster’s control. And, as soon as they are distributed internationally, it becomes extremely difficult for professional investigators to locate them.

Why is it so difficult? What makes international asset tracing more complex than domestic? More importantly, how do investigators navigate these difficulties to help victims recover their stolen possessions?

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The limitations of desktop research

Remote desktop research forms the backbone of any asset tracing exercise.

Investigators use a combination of enhanced open-source and public registers (including Companies House and the Land Registry, if they are operating in the UK) and closed-source data to compile a list of assets registered or linked to a suspect. They then supplement this information with mainstream and local media enquiries, social media data, and similar public domain information to build a comprehensive profile of the target.

Social media data, in particular, has become increasingly important for spotting inconsistencies between the suspect’s public and private personas. It is also vital for identifying other potential locations or assets for further enquiries.

For example, though the suspect may not display the contents of their Facebook profile to the public, their children may not be quite so careful. A quick search through their photos might reveal geo-locations of areas and properties that the suspect frequents. Perhaps even garages full of high-end sports cars, as well as evidence of holidays to continental villas and lavish parties.

It is unlikely the investigator will obtain all the evidence they need from desktop research alone, however. Especially if the trail extends beyond national borders.

Investigators must contend with unfamiliar, foreign databases. They must also navigate inconsistent data privacy laws (more on that shortly) and the likelihood that the suspect has gone to great lengths to hide the assets in question. Perhaps by registering them in the name of a friend or family member, in an offshore shell corporation, or via a near-impenetrable web of discreet wire transfers.

This drastically increases the time and effort needed to locate and freeze assets. Assuming there is a clear paper trail connecting the suspect’s activity to your stolen assets in the first place – which is vital to corroborating your claims in court.

Skilled investigators know how to navigate these pitfalls and find the information they need to build a solid case.

Inconsistent data privacy regulations

Data privacy laws differ from country to country. In the US and Russia, acquiring sensitive data such as bank records is relatively easy. This makes life much easier for investigators, but this level of access is far from universal.

The EU is especially stringent on its data privacy laws – rightly so. Statutes like the General Data Protection Regulation (GDPR) makes it extremely difficult to obtain the type of personal or business records that would assist an asset trace. For example, a court order is required to access the equivalent of Companies House records in some countries. As a result, it takes far more time and effort to locate assets.

There is another drawback of GDPR – albeit an unintended one. If the fraudster manages to overcome anti-money laundering processes and secure their ill-gotten gains somewhere offshore, these same regulations make it harder to track them down. The documents and records that would help them follow the sequence of transactions are simply not easy to access.

Foreign legal systems are also inherently difficult to navigate. Depending on the country, these might differ substantially from the UK. Add to that the speed with which assets can be moved in the digital age and it is easy to see why international asset tracing presents such a challenge.

With so much to consider, it is unwise to try and trace assets without professional help and advice. We recommend hiring a dedicated investigations team who know how data privacy regulations work.

Coordinating in-region resources

In situations where the investigator has exhausted the data available to them but is still unable to locate assets using obfuscation techniques, the next step is to leverage any in-region resources they have at their disposal – including human sources.

Local assets can identify records from public registers that are simply not available online. They can also conduct further enquiries with individuals who possess personal knowledge of the subject or industry under investigation, which may provide further insights as to the location of the stolen assets. Failing that, it may shed light on other information relevant to the investigation. Although the investigator must first corroborate this information through additional research.

Of course, this requires a significant investment of time and resources.

The longer the investigation, the greater the cost and the less likely you are to recover the full value of your stolen assets. Worse, there is a greater risk that the suspect will become aware of the fact that they are under investigation, giving them the time they need to move your assets further out of reach.

In-region investigations also require close collaboration with local authorities. The investigator must seek appropriate legal counsel to navigate the complexities of operating within an unfamiliar jurisdiction. Not only to track down the lost assets but to support the ensuing civil litigation and ensure that any information uncovered is admissible in court.

As a result, success often depends on the quality of the investigator’s intelligence network. Which is why it is so important to seek professional advice at the start of any asset tracing exercise – not only those that cross international borders.

Navigating the complexities of international asset tracing

The best way to shield your assets is to make it as difficult as possible for fraudsters to steal them in the first place. This demands robust cybersecurity protocols and regular reviews of your internal processes to ensure you are doing everything you can to protect your business.

Of course, it is rarely that simple. Criminals are always finding new ways to defraud hardworking individuals – no matter how proactive they are. While the increasing popularity of cryptocurrency makes it easier to launder embezzled funds.

The value of professional investigative services cannot be underestimated in a dynamic environment like this. Particularly where international asset tracing is concerned.

There will always be challenges to overcome, but they possess the knowledge, experience, and resources needed to give you the best chance of recovering your assets and bringing criminals to justice.

Intelligence that provides stability